What are seller concessions, and how do they work in Scottsdale, Arizona?

A seller concession is money the seller agrees to put toward the buyer's costs of buying the home, most often the buyer's closing costs. It is written into the contract, so it exists only if the seller agrees to it, and when it works the way it's meant to, it shows up as a credit on the buyer's closing paperwork. Lenders call this kind of help an interested party contribution, and Fannie Mae's Selling Guide describes it as a contribution made by someone with a vested interest in the transaction, which includes the property seller.

I'm Jen Keene, a REALTOR® with eXp Luxury in Scottsdale, AZ, and I'm the agent people call at every stage of their life. Here is what Fannie Mae, the Consumer Financial Protection Bureau (CFPB) and a mortgage insurer's training sheet say about it, with the source named next to each fact.

This is general information, not legal, tax or lending advice. These are national lender and consumer-agency sources, so the wording of your own contract and the rules of your own loan are what count, and your lender can tell you what applies to your loan. I checked each source on November 9, 2026.

Fannie Mae's Selling Guide says the contributions it allows can go toward the borrower's closing costs, including prepaids, and toward certain homeowners association assessments for the period after closing. It sets a limit on those HOA assessments, so if the seller paying HOA dues is part of your offer, ask your lender how much of it the loan allows.

Prepaids are the items collected up front when you close. The CFPB's Closing Disclosure explainer lists them in Section F on page 2 and says the category includes the interest on your loan between the time you close and the end of that month.

A seller can also pay for an interest rate buydown. Fannie Mae's Selling Guide says that when an interested party funds a temporary or permanent buydown, the cost of it has to be counted toward the contribution limit, so a buydown and closing-cost help come out of the same allowance. If the idea is a credit toward a repair, ask your lender whether and how it counts toward your loan's limit, because the Fannie Mae page does not mention repairs.

Fannie Mae's Selling Guide says it does not permit these contributions to be used for the borrower's down payment, financial reserve requirements or minimum borrower contribution requirements, and the Radian training sheet says the same. So a seller credit can lower what you owe in closing costs, and it can't stand in for your own money down on a loan of that kind.

An amount larger than your closing costs is handled differently. The Selling Guide says any amount over the borrower's closing costs is treated as a sales concession, and that a sales concession is deducted from the property's sales price. Enact, another mortgage insurer, says the same about amounts over the limit.

It depends on the loan, and the lender sets it. For a conventional loan that Fannie Mae will buy, the Selling Guide says the contributions are subject to maximum limits, and it says that those limits are measured against the lower of the sales price or the appraised value, not the loan amount. If that lower figure comes in below what you're paying, the limit shrinks with it, and here's what happens if a Scottsdale home appraises low.

As of the page revision dated May 7, 2025, which I read on November 9, 2026, Fannie Mae's limits for a principal residence or second home are 3% of that lower figure when the loan is more than 90% of the home's value, 6% when it is between 75% and 90%, and 9% when it is 75% or less. For an investment property the limit is 2%. Radian's training sheet lists the same figures for both Fannie Mae and Freddie Mac. Limits are revised, so check the current numbers with your lender.

These percentages apply to conventional loans sold to Fannie Mae. I'm not quoting limits for FHA, VA or any lender that sets its own, because I could not confirm them in two places. Your lender can tell you the limit for your loan before you write an offer, and my post on how financing works when buying a home covers the loan side.

As a seller credit on the Closing Disclosure. The CFPB's explainer says the Seller Credit line on page 3 is the amount the seller has agreed to contribute to your closing costs, and that it sits in the section for amounts paid by or on behalf of the borrower at closing. It also says that if the seller pays particular costs instead of a general amount, those may be listed as "Seller Paid" line items on page 2.

Attorneys' Title Guaranty Fund's Closing Disclosure FAQ for title and escrow offices describes the same thing from the other side. A last-minute seller credit is entered in Section L on page 3, and fees the contract says the seller pays are shown further down that section. Page layouts and labels can differ by software, so go by the form you're handed.

The CFPB tells buyers to check that the Seller Credit reflects what they agreed upon with the seller. I'd compare it to the contract line by line, and if the number is different, ask your lender and the escrow office why before you close. Here's how escrow works in Arizona.

No. It is a term of the contract, and the seller has to agree to it. The CFPB describes the credit as an amount the seller has agreed to contribute, and a lender checks the contract along with the other loan documents. If the seller doesn't agree, there's no concession, and if the seller agrees to a different amount, the contract says that amount.

I'm not going to tell you what to ask a seller for. That depends on the home, the loan you're using and your own numbers, and your lender and agent can walk through it with you once they've seen all three.

The contribution has to be disclosed. Fannie Mae's Selling Guide says a loan with undisclosed contributions is not eligible to be sold to it, and it lists contributions paid outside of closing and not shown on the settlement statement as an example. The guide also tells lenders to review the sales contract, the Loan Estimate, the loan application, the appraisal and the settlement statement, and to confirm the fees match across them.

The plain version for a buyer is that every dollar a seller puts in belongs in writing in the contract and on the closing paperwork. A side arrangement between a buyer and a seller that the lender doesn't know about can put the loan at risk.

• What's the limit on seller contributions for my loan? It depends on the loan type, the occupancy and the size of your down payment.
• What can it pay for on this loan? Closing costs, prepaids, an HOA assessment or a buydown each come out of the same allowance.
• What happens if the appraisal comes in low? The limit is measured against the lower of the price or the appraised value.
• Would a credit toward a repair count against my limit? If an inspection turns something up, ask before you write it into the contract. Here's how the inspection period works in Arizona.
• Does the contract wording match what my lender needs to see? The credit has to be written the same way on every document.

If you tell me what loan you're looking at, I'll help you put those questions to your lender in the right order, and closing costs in Arizona and who pays what shows what the credit would be applied against.

Here's how buying a home works in Arizona, step by step, and here's my guide to buying a home in Scottsdale.

If you have a home in mind and want help working out what to ask for and in what order, get in touch or call me at (480) 203-6605. For anything that depends on your own loan, your lender is the person to ask.